Ad Monetization For Hyper Casual Games - A Data Scientist’s Playbook

Mobile game publishing is undergoing a dramatic paradigm shift, and hyper casual games are at the center of it all.

Characterized by their short engagement loops, low retention, and ad-based monetization, hyper casual titles represent a stark departure from the whale-driven, IAP-centric, tentpole economies traditionally found in the social casino and build & battle genres. This new publishing approach, which has allowed innovators like Voodoo to attract investor attention to the tune of an estimated $200 million, is the product of a disciplined, data-driven approach to growth. By unifying the traditionally disparate practices of user acquisition and mobile ad monetization, data scientists are constructing efficient growth engines to power some of the most lucrative app portfolios in the mobile industry.

Often relying on single game mechanics, publishers of hyper casual games are able to maintain high-frequency release schedules, publishing as many as 5-10 titles per month. As a result, it’s become common in recent years to see the app store’s top free charts dominated almost exclusively by hyper casual titles. The most successful among them invoke intuitive designs that harmonize with mobile hardware affordances, offering players satisfying “snack size” play sessions that are perfectly suited to gaming on the go. Due to their shallow gameplay CPIs are traditionally much lower for hyper casual titles, but so are retention rates, meaning publishers are challenged to build products that activate users quickly while still fostering enough investment that players will stick around long enough to be monetized.

For most successful game economies of the last five years, revenue has boiled down to roughly 80% IAP and 20% in-app advertising. As a result, business processes have evolved such that product, marketing, and ad monetization have often operated in isolation. Product departments, responsible for developing the sticky and lucrative game economies that drove the majority of revenue, were often afforded a bigger seat at the decision-making table. Ad monetization and UA were relegated junior partnership status, resulting in low/no access to engineering resources, making it almost impossible to develop efficient growth systems. Publishers embracing hyper casual publishing strategies have quickly realized the absolute necessity of aligning departmental goals, putting data scientists in the driver’s seat when it comes to portfolio monetization.

Source: State of Mobile Presentation, Mobiledevmemo - Eric Seufert, September 2017

For successful hyper casual publishers, ad monetization is no longer a one-dimensional BD pursuit of getting the best possible ad revenue partner. It’s instead about optimizing the entire growth cycle to create a revenue-positive feedback loop, including:

  • Selecting the optimal networks and traffic sources
  • Targeting the right audience segments
  • A/B testing ad creative
  • Balancing in-app advertising against retention
  • Correlating downstream behavioral events with revenue
  • Driving effective cross promotion practices

After being fortunate enough to partner with some of the world’s best hyper casual publishers, the Tenjin data-science-as-a-service team has been able to identify a number of advertising best-practices that any publisher pursuing a hyper casual portfolio can benefit from:

Ad Formats
Banners and playable ad formats typically produce lower engagement rates due to the shorter session times, and should be avoided. Rewarded video ads are easily integrated into gameplay either as extra-life or currency generating mechanics and are capable of producing a healthy CPM. Non-rewarded interstitial ads are best saved for users that have opted not to engage with rewarded ads after being given significant opportunity. If possible, A/B test both your non-rewarded and rewarded interstitial prompts to find the ideal frequency for minimizing churn. Track rewarded video engagement at the user level in order to identify video whales (100+ views) that would make ideal candidates for cross promotion.

Mediation Options
Publishers using a mediation partner can comfortably depend on MoPub for interstitial ads and Fyber/Ironsource for rewarded video. Be sure to check eCPM and fill rate in your key markets and make the appropriate choice between between black box or full control mediation. Make sure cross promotion options are available and insist on access to user level data. In-house mediation offers represents an obvious trade off between overhead cost and control/data access that might not make sense for smaller pubs. Opting to forego mediation in favor of an exclusive can have its benefits, but should only be pursued if the advertiser can provide full data access. If exclusivity seems like a fit, be sure to read this excellent blog post about how Space Ape partnered with Unity Ads to create an ad-powered growth engine.

Performance Indicators
Finally, there remain a number of traditional publishing best-practices that are no less relevant for hyper casual publishers than they are for traditional outfits. Classic ad performance metrics like eCPM, ARPDAU, retention and ROAS should all still loom large in modern growth marketers’ minds. Be sure to also make an informed choice between relative and absolute retention tracking, especially considering the majority of hyper casual users will only be 3-7 days retained. Remember also to take full advantage of custom events for Facebook ad optimization, and don’t forget to track the effects of cross promotion on user value.

Combined, these best practices are enabling data scientists to lead hyper casual game publishers to success, giving rise to a new kind of publishing business that has already started disrupting the status quo. As providers of the mobile industry’s leading growth data infrastructure, we at Tenjin are thrilled to be a part of it. Our mobile marketing suite streamlines spend tracking and revenue reporting to offer marketers a comprehensive view of their advertising ROI, allowing data scientists to build powerful growth engines with minimal overhead. To learn more, feel free to get in touch.

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